EU SPC Reform – Top 10

The European Commission’s reform proposals for SPCs (supplementary protection certificates) impact almost every aspect of the current law; create new granting powers, a new centralised procedure, and of course a new unitary SPC title (uSPC). We pick a top 10 to highlight some key issues and consider the potentially far-reaching significance for the EU (and European) SPC landscape.

1. Examination by the EU IPO (and General Court and CJEU)

• The EU IPO is arguably the most natural existing body to home another unitary EU IP right. And so its selection is not the biggest surprise, albeit nonetheless sizeable news. Examination is proposed via a new SPC division, with appeals within EU IPO’s Board of Appeal and subsequent trajectory to the General Court (GC) and ultimately the CJEU. A small fraction of soft IP cases make it to the CJEU, whereas the EU’s highest court has been a common (and not often praised) venue for SPC disputes. The thresholds for appeal may curtail the same number reaching the CJEU on appeal, but this remains to be seen.

2. New and existing SPC expertise

• A trip to Alicante, Spain sounds appealing to many, and now SPC administrators and examiners can reflect on that sentiment to consider joining the new SPC division. However, the proposal also seeks to satisfy the universally shared view of utilising the SPC experience developed in national offices, even partially (with panels of 3 proposed for examination).

3. Centralised marketing authorisations (MA) are critical

• You can only have a uSPC if you have a centralised MA. And if you have a centralised MA and want an SPC based on an EP (or a uSPC based on a UP), you must use the new centralised granting procedure. BUT, if you have a national or decentralised or mutual recognition MA, your option is unchanged, i.e. applying for SPCs nationally just as you do now (whether you have a UP or an EP). This omission means that the proposal falls short of total harmonisation, which will be a disappointment to some.

4. The creation of uSPCs

• Unsurprisingly, uSPCs can only be based on UPs (and can therefore not be opted out of the UPC’s jurisdiction). However, UPs can also be the basis for a bundle of national SPCs. This flexibility provides important clarity and will court some controversy. But it won’t court the most controversy (for that see no. 7 below).

5. SPC oppositions

• The UPC provides a single, centralised validity challenge (albeit with the opportunity to opt out during its transition period). And most SPCs grant without issue. These were some of the reasons used to argue against creating a new opposition procedure. Others argued in favour of pre-grant opposition. And what is proposed is not only the ability to make third party observations during examination, but also the ability to challenge a positive (or partly positive) opinion (within 2m). The creation of this route (including its rules of procedure, etc) is no mean feat.

6. How did validity enter the arena, especially patent validity?

• While allowing or avoiding opposition was in plain sight and debated, the courts (national or UPC) seemed the most likely forums for validity. However, and not exclusively, declarations for invalidity of a uSPC are proposed to be heard by the EU IPO too (in addition to pre-grant observations and post-grant oppositions). If this is after patent expiry, this can even include grounds of invalidity of the underlying UP. The suggestion of patent validity being handled outside of the EPO and UPC/national court is seismic news (which may become old news if it results in no one applying for a uSPC). There are even provisions that allow challengers to bring this central invalidity action as a counterclaim to national/UPC infringement actions. Overall, this part of the proposal seems set to be the most debated. And if it sticks, a key issue will be managing its jurisdiction, including estoppel/res judicata as between what may become multiple opportunities to challenge SPC validity.

7. Lots of adjustments to SPC law

• A view that has persevered has been not to reopen SPC law (e.g. the SPC waivers were inserted with minimal collateral disruption). Of course, once you open the box, all sorts of thing start to jump out. That is what seems to have happened (both here and see nos. 8 and 9). Even where the proposals say it is not going to change the law – e.g. on Article 3(a) – there are numerous new recitals, which of course may interface and influence the teleological interpretation of parts of the law that have not been changed.

8. Impacts on multiple SPC ownership

• The first clear and obvious ‘clarification’ hits Article 3(c), albeit by adding to Article 3 and not changing what Article 3(c) says. In sum: multiple SPCs per product remain possible, and when based on different patents, those patents must not be owned by “economically linked” entities. Many will consider this to be a step in the right direction. The proposal appears to focus on grant, which would e.g. not address the scenario if SPCs are later assigned.

9. No more ‘third party SPCs’

• This is another ‘clarification’ and addresses mismatches between patentee and MA ownership, which is one of the few questions that has not been substantively considered by the CJEU (despite being asked). The proposals introduce a new requirement outside Article 3 (and so not a ground of invalidity or opposition), again with further detail in the recitals. This requires the patentee entitled to the SPC to get the MA holder’s consent if it is a third party. On its face, this seems to put an end to ‘third party’ or ‘offensive SPCs’ – i.e. where broad patents are used to apply for SPCs on the products of non-licensees. This has always split opinion in the SPC field (including between SPC applicants).

10. Will UK SPCs follow or diverge?

• SPC law in the UK post-Brexit is largely a cut and paste of the EU regulations now subject to reform. Assuming the UK remains out of the UP, this does not impact the uSPC. The key question is whether the UK will either follow suit to preserve harmony with any reforms to EU SPC law, diverge by not doing so, or perhaps even strike out to forge its own pharma incentives package. This is a hot topic, not least given the significant flux in EU pharma law at the moment, including the significant parallel reforms proposals in the pharma regulatory framework and data exclusivity. Moreover, there are the changes to the Northern Ireland framework that impact on SPCs, and which may re-unite NI and GB SPCs under a single UK title and procedure compared to the current split. These will all need to be taken into account.